Rambus, Nvidia sign patent agreement; shares rise

NEW YORK (Reuters) - Chip designer Rambus Inc (RMBS.O) granted patent licenses to graphics chip maker Nvidia Corp (NVDA.O), the companies said on Friday, raising hopes of an end to a lengthy legal battle and boosting their shares.

Rambus granted Nvidia a patent license at a 1 percent royalty rate for SDR memory controllers, technology that relays signals between the device and its memory. Nvidia makes graphics chips that use SDRAM. Rambus will also charge Nvidia a 2 percent royalty rate for other memory controllers,

The agreement comes after the International Trade Commission ruled last month that Nvidia and others had infringed Rambus' chip patents.

Nvidia and Rambus also said they had not signed any releases of liability, nor dismissed any litigation between them, leaving open the possibility that the two companies may still slug it out in court.

However, Nvidia spokesperson Hector Marinez said the agreement eliminated any possibility that the ITC could impose an import bar.

"We want to make sure there's no impact to our customers. That's our number one priority," Marinez said.

A Rambus representative declined to comment.

The agreement could affect the calculation of damages in that legal fight, said James Hopenfeld, an intellectual property partner at Ropes & Gray who is not involved in the case.

The deal could also be a way for Rambus to send a signal to its other litigation foes, Hopenfeld said.

"From Rambus's perspective, it's probably terms they wouldn't complain about if they were used to gauge royalty rates for other people," Hopenfeld said.

The deal with Nvidia could generate approximately $10 million in quarterly revenue for Rambus, BWS Financial Inc. analyst Hamed Khorsand said.

"What it could impact is getting other companies to renew and take new licenses for Rambus," Khorsand said.

Rambus licenses patents for use in other companies' products, such as the Sony Corp's (6758.T) Playstation 3.

South Korea's Samsung Electronics Co Ltd (005930.KS) settled its long-running legal battle with Rambus in January, agreeing to a licensing and investment pact that could be worth $900 million over half a decade to the memory chip designer.

The U.S. Court of Appeals for the Federal Circuit in October will rehear arguments in a dispute between Rambus and Hynix Semiconductor (000660.KS) and Micron Technology Inc (MU.O).

Rambus shares closed up 3.8 percent at $18.71, while Nvidia ended up 4.8 percent at $9.39.

(Reporting by Ritsuko Ando and Dan Levine in New York and Abhiram Nandakumar in Bangalore; Editing by Lisa Von Ahn, Derek Caney and Bernard Orr)